A specialist superannuation law firm has urged SMSF advisers and their clients to review fund trust deeds immediately in light of the new legislation governing retirement savings passed in November last year.
“Some SMSF trust deeds will still be adequate, but there are a significant number that contain provisions inconsistent with the new rules or do not have appropriate terms,” Cooper Grace Ward partner Scott Hay-Bartlem said.
“In addition to the new rules, there are reasons to update now, including recent innovations in SMSF trust deed drafting, cases on binding nominations and conflicts of interest, as well as substantial guidance from the ATO on a range of superannuation issues.
“These would be advantageous to have in you SMSF trust deed.”
Hay-Bartlem pointed out many deeds had not been updated since 2007 when the original Simpler Super changes were brought in.
He noted there were a variety of elements to contemplate when reviewing the trust deed in light of the most recent system amendments.
They include determining if the trust deed allows the use of reserves for contributions and income, knowing if the deed allows the terms of a pension to be modified without the need to stop and restart it, whether the deed contains a sufficient number of options for the payment of death benefits, and if the deed gives the fund trustees the ability to pay child pensions.
Other areas that might also require attention were whether the deed allowed trustees to segregate assets if they were not in pension phase, and whether there were dispute-resolving mechanisms present between members that would allow them to exit the fund without the consent of the others involved, Hay-Bartlem suggested.
“As with everything with SMSFs, it is important to ensure the trust deed will allow you to do the things you want and need to do,” he said.